A credit card can be a very useful financial tool for you. Meanwhile, it comes with many pitfalls which you should try to avoid. In recent days, the usage of credit card users has gone up. In recent research done by The New York Times, it has been found that more than 189 million Americans are using credit cards. There is an average of having at least 4 credit cards per person.
With the attractive offers and discounts available for credit card users, people just cannot let go of the opportunities. It can lead you to debt which seems easy for you to avoid on the surface but is quite difficult. Having a number of those “put me in debt tools” in your hands can drag you from a millionaire to a beggar in no time. This is where you need debt consolidation or a debt settlement company in New York.
To keep you out of debts by credit cards, here are 5 reasons why you should not have multiple credit cards.
Multiple credit cards can tempt you to do unnecessary expenses and buy stuff of no use to you at all. Also, it can lead you to be a target of impulse buying which will increase your monthly expenses. If you have a family to take care of, then monthly expenses should be taken into consideration to maintain stability in your financial condition.
Difficult to manage
Having more than one credit card is not a bad thing. But, maintaining it, keeping a track of each billing cycle, paying the bills with its interests on time is a tedious task. If all those installments and payments are to be done at the same time or month, then you have to eat only bread and cereals until you pay all your bills. Managing debt is an essential element of money management.
Can lead to unnecessary debts
Again, if you forget to pay your bill on time it will put you in debt. Remembering those “make payment” dates can be challenging. For those who have a good memory, they can manage it by making notes. They can also do this by mentioning it on their to-do list. Otherwise, people like me would need someone who reminds me to do the payments. Else, I will need a debt consolidation or debt settlement company in the future.
Huge interest rates
Credit card companies charge interest rates on some cards which have double-digit interest rates. When you are borrowing money with double-digit interest rates, it is not going to help your finances. And if one card makes your finance management unstable, then simply having more than one card multiplies the instability. The cost of purchase is low. You will just end up paying more for the same item as you have purchased it by credit card. This will make your purchase expensive.
Impact on credit score
If you only work seasonally or for any reason your financial condition gets unstable, you may not have enough money to pay a credit card balance in full every month. It will lead to accumulating interest every month and growing risk to your credit score. If a credit card holder defaults payments on multiple cards, it can have a significant negative impact on the credit score. Poor credit scores can generate other problems as well. Some employers run credit checks on job applicants and may not hire you if your credit score is too low. Your credit score is important when purchasing a home. This is because it will determine the interest rate on your mortgage. Also decides whether you are eligible for a mortgage in the first place.
The main problem is that credit card companies make their money when you make financial mistakes with your credit card and thus encourage you to fall into debt. So, there comes the role of the debt settlement company that helps you to get rid of your debts and manage them efficiently. Debt consolidation helps you to pay off a small debt in one go by taking one big loan. By doing this, they save on interest as well as the finance cost of the small loan owed by them. You would now have to make one payment instead of making multiple payments to other creditors.
It can happen on debts that are not tied up to an asset. Education loans owed on a credit card, personal loans are some examples of unsecured loans that can come under debt consolidation.
Surviving without a credit card nowadays can be difficult especially when this is the electronic era where electronic payments are evolving with the new technologies. The risks of debts are high which can affect your mental peace too. If at all you get stuck with debts and can not find a way to pay them off, then you can consult and reach out to a debt settlement company or ask for debt consolidation.